The invention relates to systems and processes for dispensing value to a cardholder in response to an authorization over an electronic data network. A variety of cards are available to enable a customer to electronically interfere with a financial institution. Credit cards (plastic cards having a magnetic stripe with an encoded account number), are a well known example of such cards and card systems. These cards may be read by special terminals at a merchant's site, commonly referred to as point-of-sale (POS) terminals. The account number may then be transmitted over a network, such as the Mastercard or Visa network. In addition to the account number, the amount of the transaction, card expiration date, and merchant information are also transmitted for authorization. A remote computer checks a database to determine whether the credit card customer is still within their credit limit before authorizing the purchase.
Another type of card is a debit card, which is not used to extend credit but rather to withdraw cash or pay a merchant immediately. The amount of the transaction is deducted from the customer's checking account, which the customer may periodically replenish. The customer must have the money in the account before the transaction is approved, rather than having to pay the money on credit extended, as with a standard credit card.
A further type of card is an automated teller machine (ATM) card. These cards are typically issued by a financial institution or a bank, allowing a customer to access the customer's checking or savings account for withdrawal from a remote ATM. The remote ATM is connected through an ATM interchange to various banks subscribing to a particular ATM network. This causes an immediate deduction from the customer's account, similar to a debit card. The immediate deduction is actually a same day or same night deduction, since the amount of the transaction is typically recorded and then actually processed in batch mode at night with other transactions. One potential shortcoming of the ATM system is if the ATM card is lost or stolen, and used by another person. The use of a Personal Identification Number (PIN) that is known only to the customer, eliminates much of the risk. Another control is imposing a daily limit (e.g., $200), on any withdrawals by a particular card during any day.
Further types of cards store the account amount directly on the card. An example would be a transit card, such as cards for the California's Bay Area Transit (BART) district. When BART cards are purchased, the dollar amount of the card is magnetically recorded on the card. Each time the card is used by passing it through an access terminal, the fare is deducted from the amount on the card, and a new card value is magnetically recorded on the card itself. An advantage of such a card is that if it is lost or stolen, the potential loss value is only the amount recorded on the card itself. A disadvantage is that there is no ability to contact the issuer and freeze the remaining account balance.
Other than these types of cards, and currency itself, a further conventional device for obtaining cash is a traveler's check. Traveler's checks are generally desirable as compared to currency because of the signature authorization required and the ability to report them as stolen or lost and identify them by serial number. In addition, traveler's checks are issued in limited amounts, which may limit possible exposure. Unlike debit cards or credit cards or even ATM cards, there is no account number that may easily be verified online to see if the account has been closed.
None of these card or payment systems, however, provides the multiple types of control over the distribution, use, and authorization that is sometimes desired in an insurance payment systems. For example, in an insurance payment system, it is sometimes desirable to control the type of goods that may be purchased, the types of stores at which an insurance payment may be used, and/or the specific identities of the stores at which an insurance payment may be used.
There is a need, therefore, for a payment system for insurance industries in which improved control over such payment may be employed.